Although full-service restaurants have slowly been losing share of restaurant spending to less expensive and more convenient fast food and fast casual restaurants, they still made up the largest share of revenues from eating and drinking places in 2019, according to Food Carryout & Delivery, a recently published report market research firm Packaged Facts.
As the coronavirus pandemic sweeps the nation in 2020, foodservice revenues are forecast to decline more than 25% from 2019 as dine-in service shuts down amid decreased consumer spending on restaurants as people stay at home and cook more even as some states slowly begin reopening. Revenues will return to growth and recover by 2024, although growth is expected to remain slower than during the 2014-2019 period due to permanent restaurant closures and continued negative impacts on consumer spending.
Full-service restaurants are expected to continue seeing decreased share of restaurant sales as revenues from fast food and fast casual restaurants grow faster through 2024. Independent full-service restaurants will be especially harmed in the short term by the widespread closures of dining rooms.
Packaged Facts estimates that thousands of full-service restaurants and bars will close permanently in 2020 due to not being able to compete effectively in the temporary landscape that bans dine-in service—their chief business. Up to 20% of such eating and drinking establishments (including independent and franchised/large chains) may close in 2020 as cash flow dries up due to closed dining rooms and inability to make up enough lost dine-in sales on carryout and delivery. The number of establishments will begin to recover in 2021 and through the forecast period as new restaurants open to replace some of those lost during the pandemic.
Although fast food and fast casual restaurants will be less affected by permanent closures in 2020, they will also experience lost revenues as fewer consumers are out and about.
Other eating and drinking places will also be hurt by decreased travel and shopping in person, with buffets and cafeterias being mandated to close for dine-in service in many areas. Other foodservice establishments will be especially harmed by COVID-19 in 2020, as events and areas that house large crowds are shuttered and recreational travel declines sharply.